The Tax Factor was created to educate individuals and small-business owners about taxes. Let’s face it, nothing in life is guaranteed except death and taxes. Okay, maybe that sounded pretty depressing but the goal of this blog is to help you find the information to learn how to make taxes work for you. Taxes can be extremely complicated but knowing about deductions and credits can save you thousands of dollars per year.

Aug 17, 2012

Leaving Here: Ten Tax Tips for Individuals Selling Their Home

Here is a message brought to you by the Goodfellas at the IRS

The Internal Revenue Service has some important information for those who have sold or are about to sell their home. If you have a gain from the sale of your main home, you may be able to exclude all or part of that gain from your income.

Here are some tips from the IRS to keep in mind when selling your home:

In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.

If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).

You are not eligible for the full exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.

If you can exclude all of the gain, you do not need to report the sale of your home on your tax return.

If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.

You cannot deduct a loss from the sale of your main home.

Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude. Most tax software can also help with
this calculation.

If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.

Special rules may apply when you sell a home for which you received the first-time homebuyer credit. See Publication 523, Selling Your Home, for details.

When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive mail from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.

For more information about selling your home, see IRS Publication 523, Selling Your Home. This publication is available at IRS.gov or by calling 800-TAX-FORM
(800-829-3676).

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About Me

As a federally authorized Enrolled Agent and owner and CEO of the Brooklyn-based J.S. Tax Corporation, Jamaal Solomon provides tax services, business consulting, and IRS problem resolution. Delivering expert service, with his mission to “Take the fear out of taxes” for his clients, Jamaal has prepared federal and multi-state tax returns for individuals, partnerships, not-for-profit organizations, and corporations; has helped numerous tax-exempt organizations with their 501 (c)(3) applications; and has fielded a broad range of client and governmental inquiries on specific returns.
Licensed as an Enrolled Agent since 2007, Jamaal is empowered by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the IRS for audits, collections, and appeals. As part of the Enrolled Agent program, Jamaal completes an average of 24 hours of continuing professional education each year. He earned his MS in Taxation from CUNY Baruch in 2009 and a BS in Business Management from SUNY Stony Brook in 2002.